India has failed to build an ecosystem of batter cells. Can a new PLI change this?

More Indians are opting for electric cars and scooters, turning what were once niche products into an increasingly familiar sight on the roads. The trend picked up further after the West Asia war led to a rise in fuel prices. Electric vehicles now account for 8% of new car sales and 11% of new two-wheeler sales.The rapid electrification may have helped India reduce its fuel import bill, but it has accelerated import of another highly specialised commodity—the battery cell. India’s cell imports surged 94% year-on-year to `15,721 crore in the first quarter of FY27, according to commerce ministry data. In July, battery cell imports soared 159% to `7,209 crore compared with `2,772 crore in the corresponding month last year. In all of FY26, lithium-ion cell imports rose 64% to `41,667 crore. China’s share is 85%. The spike in battery cell imports comes as the government is promoting electrification through incentives such as PM E Drive, PM-eBus Sewa, and the production-linked incentive (PLI) scheme for auto and auto components. The government has been trying to reduce this dependence but with limited success. To make India self-reliant in battery cells, it rolled out a Rs. 18,100-crore PLI Scheme for Advanced Chemistry Cells (ACC) in May 2021. Even though it awarded 40 GWh (gigawatt-hour) of battery cell capacity, cell production has barely begun. Except Bhavish Aggarwal-led Ola Cell Technologies, no PLI beneficiary has been able to set up cell manufacturing capacity. Ola Cell Technologies, too, has started commercial operations with only 2.5 GWh even though it bagged 20 GWh of capacity under the PLI ACC scheme. No cell maker has received any incentive yet.One reason is the dependence on imports for battery parts, mainly from China, which some say is “weaponising ” access. Now, the government is planning a Rs. 12,000 crore PLI scheme for battery cell components such as cathode and anode active materials, electrolytes and copper foil separators. It wants to develop the entire raw material ecosystem.The ACC PLI Scheme has not worked as we need incentives for cell components first, Anurag Choudhary, Chairman, Managing Director and CEO of Himadri Speciality Chemical Ltd, tells BT. “Unless you have raw material components, you will remain an assembler,” he says. The government must play a critical role, he says. “This is going to be a big industry,” he says, adding the best option is to set up the entire value chain in the country. Himadri plans to set up a 2,000-tonne plant for cathode active materials, a key raw material for LFP (Lithium Iron Phosphate) cells, in Kolkata. The company expects it to be operational by December 2026. “We are also working on a 40,000 metric tonne plant, which will be operational in FY28.”Himadri has started a 200-tonne plant in West Bengal to produce anode from coke and coal tar. “Cathode and anode account for 65% of a cell’s cost,” says Choudhary. Himadri plans to invest `4,200 crore for building cathode active materials; lithium carbonate comprises 25% of such materials. Since lithium is not mined in India, Himadri plans to buy from Argentina, Bolivia and Chile.Electrolyte is the only component that cell producers buy locally, while everything else comes from China, as no Indian company produces raw materials at scale, says Vikram Handa, founder and managing director of Epsilon Advanced Materials. Over 90% of cathode and anode active material is processed in China, says Handa.The government has been trying to fix things, but the industry is struggling, says Handa. “I think the intention of ACC PLI was that demand is coming and so let’s promote this segment. In the last three-four years, the challenge has been that it is a high technology space that is moving extremely fast,” he says.Lack of investment in technology is one reason for the situation, says Handa. “The biggest challenge is risk capital. Today, someone putting in Rs. 2,000 crore wants to earn in the next quarter. That’s difficult in this industry. Are companies ready to invest 8-10% on R&D? Not many are. The government can only nudge and bring in policy enablers,” he says. The key is to look at the entire battery value chain rather than each part in isolation, says Handa. “If we want to localise cell manufacturing, we also need to localise the materials and components that go into the cell. Otherwise, we will continue to depend on imports for a large part of the value chain, which can also become a national security issue,” says Handa.Epsilon makes graphite anodes at its 2,000-tonne plant, which can cater to 2 GWh of cell capacity. It is looking to scale it up to 30,000 tonnes by 2028. Epsilon’s anode material project has secured approval under MeitY’s Electronics Component Manufacturing Scheme with Rs. 145 crore in capex support, covering 25% of the capital investment.Battery cells produced in India are expected to cost roughly 20% more than Chinese imports, says Himadri’s Choudhary. “China sells below cost so that no one finds it commercially viable,” he says. To make India self-reliant in battery cells, both operational and capital incentives are needed, says Choudhary. “We need support for the initial years,” he says.“There is a need for government support for cell components. China sells at a very competitive price. So, there are hardly any margins. The Indian government has to come up with a component scheme to make the business viable,” says Choudhary.An executive of a cell company in India told Epsilon’s Handa that if they buy everything from China at the cheapest price and not buy anything locally, their cell is still 25% more expensive than a Chinese cell. Making a StartLead acid battery maker Amara Raja Energy & Mobility, which is building the technical know-how in-house after its proposed partnership with China’s Gotion hit a wall, is slowly warming up to locally made cell components for the recently commissioned Customer Qualification Plant (CQP) at its Giga Corridor in Telangana. With an initial capacity of 60 MWh, it will make lithium-ion cells that customers can test and validate ahead of commercial production.“We use mainly imported materials today. But some Indian materials are being made available. We have started making batches of cells with select local materials. This is happening slowly. In each batch, we introduce one material change to better track any variability in performance,” says Vikramadithya Gourineni, Executive Director, Amara Raja Energy & Mobility.While the ACC PLI scheme was well-intentioned, the projected battery cell capacities have not been built, says Gourineni. Can it be tweaked? “I have looked at other government policies that could prove to be effective. The Indian Semiconductor Mission has a much bigger outlay. The approach is fundamentally different. A high-powered inter-ministerial committee looks at different aspects: access to tech, where the product fits in the ecosystem, operational feasibility and strategic partnerships with customers to ensure offtake. After all these things are looked at, the disbursal happens in a milestone-based approach,” says Gourineni.“There is a much more entrepreneurial play by the government, which is underwriting a lot of risk through the execution of the project,” he says. Amara Raja plans to invest `9,500 crore to set up 16 GWh cell capacity by FY31. Weaponising TechDespite the recent thaw in India-China ties, several Indian companies, including Reliance Industries and JSW Group, are struggling to acquire the technical know-how for cell manufacturing. At the recently concluded BRICS Summit in New Delhi, Prime Minister Narendra Modi said weaponisation of technology and critical minerals can hinder shared progress of the bloc.Reliance Industries, through its subsidiaries Reliance New Energy Battery Ltd and Reliance New Energy Battery Storage Ltd, was awarded 15 GWh capacity under the ACC PLI Scheme. The conglomerate is yet to install any capacity. Access to battery technology is being “weaponised”, Anant Ambani, Executive Director of Reliance Industries, said at the company’s 49th Annual General Meeting. “In a world where supply chains are being contested and access to technology is being weaponised, building world-scale battery manufacturing capacity in India is not merely a business decision. It is a strategic imperative for national resilience,” Ambani said, assuring that Reliance New Energy plans to commission the first phase of its 40 GWh battery cell gigafactory this year as all the equipment has been delivered.Earlier in August, JSW Group scion Parth Jindal said China is guarding LFP cell-making technology “like a weapon”, pushing the steel-to-automobiles major to put its plans to make battery cells in India on hold. “We are keen to make cells in India. LFP cell technology is not available for us. The hunt is on for a technology tie-up. Hence, that project is currently on hold,” says Jindal. “LFP cells come from China, and they are not giving us the technology. We are ready to invest and make it in India,” he says.India wants to build batteries at home and reduce its dependence on China, but Indian companies still need Chinese technology to make that happen. Developing homegrown alternatives, meanwhile, will require significant investment and sustained government support. @karandhar11

India has failed to build an ecosystem of batter cells. Can a new PLI change this?

Battery cell imports surge as India fails to build a component ecosystem. Can the new PLI change this?